Inclusion of Companies as Necessary Parties in Minimum Wages Act Offences: Karnataka High Court’s Ruling
Case Name: Padpara Patti Syed Basha Aysb v. The Labour Department Government Of Karnataka
Case No.: Writ Petition No. 14973 Of 2023 (Gm-res)
Dated: March 26, 2024
Quorum: Justice S Vishwajith Shetty
FACTS OF THE CASE:
In a criminal complaint filed before the Court of Judicial Magistrate First Class, Mr. Padpara Patti and Mr. Sameer Sulathana were named as accused parties. The lawsuit claimed that the 1948 Minimum Wages Act’s Section 25, Rules 7, 9, and 21 had been broken.
In accordance with Articles 226 and 227 of the Indian Constitution, the accused petitioners filed a writ case before the Karnataka High Court. They demanded that the Criminal Complaint’s whole proceedings be cancelled.
In a writ petition filed under Articles 226 & 227 of the Constitution of India, 1950 read with Section 482 of Cr.P.C., petitioners, who are accused nos. 1 & 2 in a criminal complaint pending before the Court of JMFC-II, Shivamogga, are registered for the offence punishable under Section 25, Rules 7, 9 & 21 of the Minimum Wages Act, 1948. Their prayer is to quash the entire proceedings in the aforementioned criminal complaint.
A writ case was brought by the accused petitioners before the Karnataka High Court, in compliance with Articles 226 and 227 of the Indian Constitution. They requested that all procedures related to the Criminal Complaint be stopped.
CONTENTIONS OF THE PETITIONER:
The accused petitioners invoked Articles 226 and 227 of the Indian Constitution to file a writ petition before the Karnataka High Court. Their main argument was to dismiss the Criminal Complaint and all of its procedures. They contended that they were no longer in directorship roles at Attica Gold Pvt. Ltd., the involved firm. They further argued that the corporation was not listed in the complaint as an accused party.
The applicants’ learned counsel claims in court that they are no longer directors of the business. He makes the submission that the Company is not named in the lawsuit as an accused party. The complaint cannot be maintained as a result. He, therefore, pryaed before the court to grant the request.
CONTENTIONS OF THE RESPONDENTS:
The learned counsel for the respondents alleged that the prayer included in the petition to be rejected by the respondent-state’s learned High Court Government Pleader. Respondent No. 2, a Labour Inspector, has filed a private complaint against the petitioners in this case with the Trial Court.
He claims to have received a complaint about the nonpayment of minimum wages from the workers of the company Attica Gold Pvt. Ltd. Despite the complainant purportedly serving the accused with a show-cause notice, the accused failed to provide the necessary documentation, address the infractions, or reply to the notice.
It was vehemently argued that he had filed a private suit with the Trial Court because of these conditions. Following its acknowledgment of the charges reported in the complaint, the Trial Court sent summonses to Accused Nos. 1 and 2, and the case was filed under C.C. No. 104/2022 against the petitioners for the aforementioned violations.
LEGAL PROVISIONS:
- Section 22(C) of the Minimum Wages Act, 1948- Offences by companies: If the person breaking any law under this Act is a company, then everyone who was in charge of the company at the time of the offence and accountable to it for the way the company conducted its business will be considered guilty of the crime and will face appropriate legal action and punishment. With the caveat that if the person can demonstrate that the crime was committed without their knowledge or that they took all reasonable precautions to stop it from being done, they will not be subject to any of the penalties outlined in this Act.
COURT’S ANALYSIS AND JUDGMENT:
The court declared that a cursory reading of the aforementioned section of the law makes it clear that, in the event that an organisation is the subject of an offence under the Minimum Wages Act, 1948, both the organisation and its managers will be presumed guilty of the offence and subject to legal action and punishment.
The court further held that the petitioners in this case are being tried in their capacities as Directors of the Attica Gold Pvt. Ltd. company, and it is alleged that they are accountable vicariously on behalf of the company. Therefore, the complaint is not maintainable if the Company is not named as accused in the complaint.
Further, the court has noted that the only way to impose vicarious liability is through a statutory provision; in other words, a legal fiction must be established in order to achieve this goal. The petitioners in this case are requesting to be prosecuted on the
the idea that they bear vicariously responsible for the Company’s operations. If it is the case, the Company has to be included as a party, and if the accused is accountable for the Company’s actions, legal fiction has to be made against the Company and the accused.
At last, the court declared that the Writ petition may be granted. This resulted in the cancellation of the whole criminal case that was pending before the Court of JMFC-II, Shivamogga. The case stemmed from PCR No. 16/2022, which was registered for violations that were punishable under Section 25, Rules 7, 9 & 21 of the Minimum Wages Act, 1948.
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Judgment reviewed by Riddhi S Bhora.